Opinion

Here‘s Why Khaw Boon Wan’s Attempt to Level the Playing Field for Taxi Drivers Will Drive Costs Up

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Peter Lin

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Other than that one incident when he suggested that the leaders of a certain opposition party commit ritual suicide for committing a mistake, I generally like Minister Khaw Boon Wan. Not only is he an unofficial “influencer” with his blog posts, but over the past decade, he’s been quite the ministerial superhero.

After all, when he became Minister for Health, he handled the double whammy of SARS and the NKF scandal. When he was Minister for National Development, he implemented property cooling measures in response to the skyrocketing housing prices. Now that he’s Minister for Transport, he’s going to take on his biggest challenge yet.

Uber.

More accurately, he’s tasked Senior Minister of State for Transport Ng Chee Meng to review private car-sharing apps and to “forge a fair solution” and “level the playing field” for taxi drivers. Mr Khaw announced this in his first blog post as the new Transport Minister, and his call for “a balanced approach” sounds like a good plan.

Except it isn’t.

 

Wait, wait, wait… what’s wrong with the “playing field” for taxi drivers right now?

Simply put, it’s a lot easier to become an Uber driver in Singapore than it is to become a taxi driver. At first glance, it may not seem so bad:

Taxi Driver Uber Driver
At least 30 years old At least 25 years old
Must be a Singapore Citizen Singapore Citizen or Permanent Resident
Valid Class 3/3A driving license for a continuous period of at least 1 year Valid Class 3/3A driving license for a continuous period of at least 1 year
(Must have at least 2 years of professional driving experience for potential UberExec drivers)

 

So if you’re a Singapore PR, or if you’re below 30, you won’t be eligible to become a taxi driver, but you can become an Uber driver. But that’s not the end of it.

 

What about how much it costs to be a taxi driver compared to an Uber driver?

Taxi drivers are required by law to obtain a vocational license, and this is the main difference compared to Uber drivers, who don’t have to be licensed. A taxi driver vocational license costs $40 for the application process and another $355 for a 5 module course that is expected to take 95 hours. That’s like going back to driving school!

On the other hand, Uber drivers have no such requirement. All they do need to do is set up their own business (which can be easily done online), and obtain a vehicle that is registered for commercial purposes with commercial insurance coverage for up to 4 passengers. Most Uber drivers choose rent this vehicle, naturally. Rentals tend to be about $65 per day, and in rare cases, go as low as $50.

What’s more, since 2014, LTA demands that taxi drivers have to meet a daily minimum mileage of 250 kilometres on weekdays, while simultaneously ensuring that 85% of a taxi company’s fleet are on the roads during peak periods. Uber drivers, being “private contractors”, don’t need to follow either of these restrictions. In fact, they are given incentives to drive more often, especially during peak periods.

 

Wow! Then why is Uber still charging me a comparable price for my journey?

That’s the big question here, isn’t it? Essentially, Uber saves on not needing to train their drivers, or provide rental and maintenance services, and passes on these savings to you, the customer. How? By not charging you for the convenience their service brings.

After all, convenience is the main reason why so many users have switched to private car-sharing apps like Uber. It cannot be understated. There is no booking fee, their mobile app is easy to use, and they run on cashless transactions. Yet their fares (outside of surge pricing) are similar to, and sometimes even cheaper than flagging down a taxi.

 

Hmmm… I think I know what you’re getting at… if the “playing field” gets levelled…

Exactly. Levelling the playing field and forcing Uber drivers to take on vocational licenses would simply reduce the amount of savings that Uber is passing on to their drivers and customers. This will eventually drive up costs of uberX rides. Which, at first glance, would be the eventual outcome that taxi drivers are hoping for. But here’s what may also happen.

Say Uber eventually becomes no different from other taxi companies in Singapore. Because younger Singaporeans have been enjoying the convenience of apps like Uber without paying for the premium, they are likely to continue using Uber despite the rising prices. After all, Uber has the market advantage – no other taxi company currently has a booking app as comprehensive as Uber’s, without charging exorbitant fees for the use of credit cards.

In response, other taxi companies will need to invest time and money to develop better apps to compete, or lose out in the long run. This will drive operational costs up, and you know the companies aren’t going to absorb the cost. They’ll be passing it on to us, the customers.

 

So what can we suggest to “level the playing field” so that consumer costs don’t go up?

Very simply, LTA needs to reduce the cost and duration of a vocational license. Then, even if Uber drivers are expected to take up these licenses, it will hopefully not increase their costs by such an extent that they’ll pass it on to us, the consumers.

That’s really it. At the end of the day, Uber is not a taxi company and shouldn’t be treated like one. Since Minister Khaw is against banning them outright, then the onus needs to be on taxi companies to streamline their operating costs and expenses. The government can’t be expected to spoonfeed taxi companies just because their profits are affected by a new, sleeker industry player.

 

What other suggestions would you suggest to “level the playing field”? We want to hear from you.

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Peter Lin

I am the poster boy for reinventing one's self. I've been a broadcast journalist, technical writer, banking customer service officer and a Catholic friar. My life experiences have made me the most cynical idealist you'll ever meet, which is why I'm also the co-founder of a local pop culture website. I believe ignorance is not bliss, and that money is the root of all evil only if you allow it to be.

  • bluex

    You mean he’s a ministerial superhero like how as Minister for Health, Khaw Boon Wan planned hospital capacity such that today we have patients lying along hospital corridors? Or like how he introduced means testing as Minister for Health such that individual out-of-pocket medical expense increased for many? Ministerial superhero indeed.

  • kess

    The roles of the taxi companies has to change with the new entrants. No more are they the financier, disciplinarian (which they didn’t no well) and be licensee/dialogue partner with LTA. The points system used by the app taxi is doing its job well. Once they reach below a certain point meaning bad, they are banned. It save the LTA job to regulate and to call up the offending driver for interview.
    The rental rate are lower.
    They don’t have to cruise to achieve the mileage, wasting unpaid for energy. After a while they would learnt where to congregate to wait for fares.
    Market force will determine availability. Surge pricing is good system and worth stream-lining.

  • Ang Eng Chong

    I think the government is trying to fix the wrong problems here. There issues are with the taxi operators and the 2 main problems to be address are as follow
    1. High COE cost which impact people and business who truly need the car. The high cost of COE is being passed down to the taxi drivers by increasing the rentals and commuters by increasing the fares. LTA should quickly address it’s fail policy in requiring car buyers to put down large deposit which car dealers are bypassing the curb by offering lease.

    2. Lack of innovation from taxi company. The point is the government can implement policy that requires vocational license and enforce other stringent requirements on uber/grabtaxi drivers but if passengers try to call for a taxi and cannot get one they will still switch to uber or grabtaxi. So if taxi company don’t innovate the only way to level the playing field is to make uber/grabcar more expensive and more unavailable.

    So let us hope the ministers understand what are the real problems before they troubleshoot. …

  • Mervyn Lim

    Your report is somewhat inaccurate. Taxi drivers pay their own fees for TDVL, not paid by taxi companies, or for that matter, Uber or Grab probably isn’t going to pay for their drivers should such vocational license needed for Uber or Grabcar drivers.

    On the other hand, taxi companies are raking in huge profits by increasing taxi rental over the years. The formula has never changed, cost of vehicle collected back in 3 years, the remaining 5 years, profit. The burden is passed on to taxi drivers and not the commuters as taxi fares have not increased in the recent years.

    Want to make a level playing field? Lower rentals of taxis by removing the need for COEs for taxis.

  • Rick Chan

    The minimum of 250 km impose by LTA is taken from the taxi-meter where there are passengers on board. The cruising round looking for passengers are not counted by LTA/taxi company.

    The UberX or GrabCar tantamount to a improve modification of the old term of “pirate taxi” that operates in the 60s.

    Complaints about gathering of taxi drivers at coffee shops. Come on, we taxi drivers start early before 6am, no breakfast. WE also deserved at rest, as siinilar with the labour/employment act also stipulate a break of 15 min if need to work for more than 6 hrs. Taxi drivers also need toilet breaks leat the get caught with other ailments like kidney/bladder problems.

  • Leonglisa

    Taxi company operating cost besides COE and R&M also includes compliance to regulatory cost. That includes having to maintain cost centres, a team to monitor the taxi availability 250km peak hours… benefits to taxi driver eg. Insurance. These cost does not apply to the apps company. Review is necessary so that the regulatory framework keeps up with the changes.

  • asyouaskforit

    If you level the playing field then it must be level to all parties in all matters. Uber drivers can go for the courses, etc but they should be allowed the full taxi privileges of picking passengers from drop offs and road sides. They should also charge customers no less than normal taxis.
    There should not be anything that differentiate them from normal taxis.

  • Ajith Mankal

    There is a group of people who are using the Taxi as their private vehicle. They are not doing anything illegal; they drive when they are done with their own private commitments. That explains why you see many “on Call” taxis at peak hours. They are paying the daily rent to the taxi companies. It is this group which causes taxis to disappear; because they are busy sending their family members to school, to MRT stations, for medical checkups, sending elderly parents to day-care centres, etc. How is LTA going to ensure the 250 km rule ? UBER is a threat to this group, not to the other cabbies who are on the road for at least 12 hours straight.